A Canadian mining firm backed by billionaire Dermot Desmond warned that the global Covid-19 pandemic is causing major uncertainty for the world's diamond industry, with the sector having already been hit by the lockdown in China that coincided with the Lunar New Year.
Mr Desmond owns just over 31pc of Mountain Province Diamonds, which along with De Beers owns the remote Gahcho Kue diamond mine in Canada's Northwest Territories, on the edge of the Arctic Circle.
Mountain Province owns 49pc of the open-cast mine, while diamond giant De Beers owns 51pc.
Mr Desmond is a long-time investor in Mountain Province Diamonds.
He has been steadily increasing his stake in the company over the past number of months.
Shares in Mountain Province Diamonds, which are listed in Toronto, have collapsed in recent weeks in the face of the coronavirus crisis.
They have declined by about two thirds in the past month, giving the company a market capitalisation of just under CA$80m (€52m).
Mr Desmond is represented on the Mountain Province board by his son, Brett.
"Broader macro-economic uncertainties continued to weigh on the diamond industry through 2019," noted Mountain Province in its newly published annual report.
It said that Chinese growth rates slowed due to trade tensions with the US, the depreciation of the yuan and unrest in Hong Kong. "In January 2020, on the back of solid results at retail in the major diamond jewellery markets, the industry saw early signs of recovery along the diamond distribution pipeline," it told investors.
"However, Covid-19's global spread has cast widespread uncertainty throughout the industry."
It added: "In China, as the outbreak of Covid-19 coincided with the Lunar New Year, it effectively negated this market's all-important diamond jewellery selling season. At present, there is significant uncertainty regarding the magnitude Covid-19 will have upon the diamond industry and future impacts on diamond prices and demand."
Overall in 2019, global rough diamond sales declined 25pc year-on-year, Mountain Province told investors.
The Gahcho Kue mine recovered about 6.8 million carats of diamonds last year, with Mountain Province receiving 3.3 million carats of that, which were sold in 10 sales during 2019.
Mountain Province generated revenue of CA$276.3m last year, down more than 11pc on 2018.
Earnings from mine operations slumped 70pc to CA$24.8m, while the company posted a net loss of CA$128.7m for the year after shouldering a CA$115.7m impairment.
The company also referred to a report from consultancy giant Bain that showed growth in lab-grown diamonds was expected to continue as industrial capacity increased and production costs declined.
"Retail prices for lab-grown products continue to fall against those of natural diamonds," it noted.